EUR – Well some seriously whippy price action yesterday 1.3472-1.3565 as we waited for confirmation out of the states that a deal would officially be agreed. The move back from 1.3550-1.3472 low into the ldn close was particularly painful as lev and spec a/cs cut positions and mkt maker stops went through. Now with the deal done mkt gets to focus on data from US that isnt clean and then the increasingly likely chance that the mkt fully prices tapering this year out. What that means for eur i think is that this 1.3450/80 remains key now on the downside and while we remain above there i think we will grind back higher towards the end of year – lvls topside 1.3600 then 1.3660 before the years highs at 1.3711. Right now in no hurry to buy eur here – think wait and look to buy at 1.3510/20 and stop below 1.3450 looking for 1.3660 again and then back to years highs.
GBPUSD – Well the last 24h has been rather ‘challenging’ to say the least. My feeling is a significant one-off sell flow went through the market yesterday afternoon, and clearly the market was caught long of Pounds (myself included). I was forced out of my position below the weeks lows at 1.5915, and here we are opening back towards the 1.60 mark this morning – frustrating. I remain bullish of GBPUSD, and will be looking to re-enter the position, expecting a new challenge of the recent high at 1.6260 soon enough. This morning’s Retail Sales release will hopefully reaffirm the positive tone of yesterdays Employment report, and one has to think there will be upside risks to next week’s Advance reading on Q3 GDP? Given the volatility, flows in the last 24h have been very light, though some Leveraged demand has been evident.
EURGBP – Not the reaction I was expecting following yesterdays dataflow, but I will persist with a ‘sell on rallies’ approach. .8490 – .8510 represents a fair short-term sell-zone, with very good support expected between .8422 – .8428. Overall, I find the GBP bull theme to be better expressed via GBPUSD, but to look to operate via a combination of EURGBP and GBPUSD is probably wiser. Leveraged selling post the UK Employment Report was the noted theme yesterday, though my best guess is some of those positions have already been cut.
*Retail Sales will be released at 9.30 – consensus expectation for total sales is +.4pcnt m/m, whilst Barclays Economics forecast +.2pcnt m/m.
JPY – So deal done in states and we profit taking o/n from Japanese a/cs top us out 99.00 area – expect this 99.00/50 area initially to be a tough nut to crack topside with exporters and retail investors keen to sell at least initially. While on the downside 98.00/20 is the support. If we do see a brief break and stop run below 98.00 i expect 97.50 to be well supported with interest from Japanese investors and rm a/cs and that should be a gd buy to play 97.50/99.50 range for now.
CHF – Another big squeeze yesterday topside yesterday to 0.9176 but unsustained as we capped ahead of 0.92 with corp selling and o/n with the general usd ‘buy rumour sell fact’ on resolution in the US we are quickly back around 0.91 this morning – Support around 0.9070 lvl should be key now we should be supported there – if not room to slip to 0.9035 which should be a nice lvl to rebuy. Topside we have seen early model demand although follow through is clearly limited right now – 0.9130 interim res then 0.9190. Eurchf supported i think 1.2315/20 (200 day m.a) while 1.2385 remains key res topside.
AUD/NZD – AUD/USD finally took out supply at 0.9550 and subsequent stops above and traded a high of 0.9569 before running out of steam again. The market doesn’t really have the appetite to take us far away from current levels and suggest more erratic/flow driven price action. 0.9499-0.9569 should nail it, with 0.9582, 2012 low resistance above that range. Kiwi 0.8400-0.8450 with similar frustrating dynamics. No data from either region until the 23rd. More if I see it.
CAD – The USD underperforms post-resolution and USD/CAD stops 1.0320-1.0300 are now under pressure(my own at 1.0310 included). I have support marked at 1.0310 and think through there could open up some downside towards 1.0280 but expect there to be some RM and corp demand sub 1.03. Difficult to see any meaningful bounce from here right now but 1.0350 should act as good resistance first-off.
Scandies – Swedish unemployment at 08:30LDN cf. 7.5%. The EUR crosses had a look higher yesterday but met with good corp supply in EUR/NOK above 8.14 and lev supply in EUR/SEK above 8.80. In EUR/SEK 8.8250-8.83 is a big level of resistance, trendline from Q4 2011 highs, and I think RM names in particular have started to build short positions on the recent rally. If we see a weak unemployment print, I think pain is to the topside while support comes in at 8.73 and should be helped by 6.45 in USD/SEK. On a strong or in line number then see no reason for SEK demand to slow, especially as the USD remains under pressure following the resolution reached in the US.
Barclays